To answer this question we will dig in History to get some initial idea of what portion of private production could politicians (especially some) have in mind to subtract and how high the American citizens permitted them go in confiscating the fruits of their work. And then you can get surprised, 90% is possible! If you check the American Tax Records it is amazing how high they went, as you can see in the chart below:

(click chart to details)

As you can see, when severe structural (1930-194?) or temporal (1916-1918) fiscal deficits appear making the Federal Debt explode, the Top Marginal Income Tax just follow them. Cause-effect? Well, yes in the sense of how difficult it was to finance such a gigantic debt: under Gold Standard was more difficult as under low inflation also, as inflation may help to pay debts (for the prove click here) The USA is (as the UK) clearly trying to inflate the Economy in order to avoid tax pains, let’s see if it works.

Three Events.

Drive a Country to higher Taxes, they are: an extended major war (or wars), an economic collapse and a prolonged mismanagement of Public Finances. The USA has suffer the first two and scaling, as in WWII the first two coincides or followed one to each other while now, thinking in the Health issue and the growth of bureaucracy and the crashes and wars in the M.E., it seems both three take inexorably to higher income taxes.

The Progressive Taxing System.

Traditionally, there was no progressiveness in taxation even when the criteria were efficacy and justice in collecting the funds to finance the State and imposing charges to citizens. But, with the contribution of Keynes in his work on Marginal Propensity to Consume, higher tax rates as Income is higher affect less Consume became logic; that is why the tax function related to Income turned more curved till 1946, as you can see in the chart below where the income data is in real terms with dollars of 2011.

(click chart to details)

The Obama Perspective:

As a Democrat his tradition is in the line of Roosevelt to whom all of his comrades get inspiration and love to emulate. So, thinking about them I have prepare you a chart with a dot light blue curve that goes from the actual situation to one intermediate between Roosevelt and Carter.

3 Comments to “How High Would Obama Rise Income Tax Marginal Rates.”

it out loud:The same politicians who have been anklitg about a need for “affordable housing” for years are now suddenly alarmed that home prices are falling. How can housing become more affordable unless prices fall?The political meaning of “affordable housing” is housing that is made more affordable by politicians intervening to create government subsidies, rent control or other gimmicks for which politicians can take credit.Affordable housing produced by market forces provides no benefit to politicians and has no attraction for them.One suspects that this is the reason that the left hates Wal-Mart so much. Wal-Mart has done more to improve the standard of living for low income Americans than almost every government program ever enacted. The left can’t tolerate the idea of peoples lives being meaningfully improved without a politicians hand providing “direction”.Ditto, free trade.We see post after post from leftists on this site about how “conservatives” are responsible for the current crisis because they embrace “laissez-faire” capitalism and deregulation. Forget the mountain of evidence that puts the lie to their argument. I have one question. Why is the left whining about the economy at all? Isn’t this the world that they’ve been working tirelessly to create? A world with less consumption. Less trade. Affordable housing. Where the rich are laid low and dependency on government handouts replaces individual initiative. Why are they calling this a crisis? They should be celebrating and heralding their good works.